Facebook Inc (FB) Earnings Beat Estimates, But Stock Plummets

Facebook Inc (FB) released its Q4 2017 earnings results after closing bell tonight. Facebook earnings amounted to $2.21 per share on $12.97 billion in revenue. Analysts had been expecting earnings of $1.95 per share on $12.55 billion in revenue. In the same quarter a year ago, Facebook Inc (FB) earnings amounted to $1.21 per share on $8.6 billion in revenue.

FB earnings impacted by tax reform bill

FB earnings for Q4 2017 amounted to $1.44 per share on a GAAP basis, which includes a negative impact of 77 cents per share in connection with the tax reform bill. The company also set aside $2.27 billion in tax provisions, which should enable it to repatriate cash at the new lower rate under the tax bill.

The social media firm reported $12.8 billion in ad revenue and $193 million in payments and other fees revenues. Mobile ad revenue accounted for about 89% of total revenue in Q4 2017, an increase from 84% of ad revenue in Q4 2016. The company’s capital expenditures were $2.26 billion in Q4 and $6.73 billion for the full year.

Facebook Inc (FB) had 1.4 billion daily active users on average during the month of December, representing a 14% increase year over year. The social media firm had 2.13 billion monthly active users at the end of the year, also representing an increase of 14% year over year. Management said 2017 was a difficult year.

Facebook Inc (FB) now decides what’s “meaningful” for its users… whether they agree or not

They also reiterated the algorithm changes already announced earlier this month, which involve giving preference to whatever posts they feel are “meaningful,” whether or not users themselves see the posts Facebook Inc (FB)has deemed “meaningful” as actually meaningful to them. Facebook Inc (FB) management also set put some numbers to the changes they’ve made:

“In 2018, we’re focused on making sure Facebook Inc (FB) isn’t just fun to use, but also good for people’s well-being and for society,” founder and Chief Executive Officer Mark Zuckerberg said in a statement on Facebook Inc (FB) earnings. “Already last quarter, we made changes to show fewer viral videos to make sure people’s time is well spent. In total, we made changes that reduced time spent on Facebook Inc (FB) by roughly 50 million hours every day. By focusing on meaningful connections, our community and business will be stronger over the long term.”

Following the FB earnings release, the company’s stock plunged in after-hours trades, falling by more than 5% to as low as $177.25.